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Environmental Disclosure a High-Stakes Issue for Corporations

January 27, 2010

Even after the entire U.S. financial system suffered a near-meltdown while Wall St. traders got performance bonuses in 2008-09, you don't hear the term "stock fraud" mentioned much these days. If you say: "why bother?" — you may be missing an environmental reporting opportunity.

"Environmental disclosure" is a buzz word among corporate lawyers today. Companies of all kinds face the prospect of major costs or losses as they face a future of unknown risks and uncertain regulations. Will the company face a billion-dollar lawsuit in a foreign country for poisoning its workers? Will the company incur billions in costs with the imposition of cap-and-trade rules — whether by states, the federal government, or foreign nations?

Stockholders have a right to know whether their profits are facing imminent disasters of this kind. And agencies like the Securities and Exchange Commission are supposed to regulate publicly traded companies' disclosure of these risks. Today, investor responsibility groups are pushing both companies and the regulatory agencies for more disclosure of environmental risks.

One source of environmental disclosure stories to keep an eye on is the American Bar Association's Environmental Disclosure Committee. Check out their home page for links to their newsletter and an array of experts.